Clinton to Set Human Rights Guidelines for Firms Overseas : Policy: Principles drawn up with China in mind have been broadened. Support from U.S. business leaders is paltry.

The Clinton Administration is preparing to ask U.S. companies to advance the cause of human rights in their operations overseas, although it has failed repeatedly to win backing from the American business community for the effort.

The White House is planning to release soon a series of “voluntary” business principles for overseas conduct that were drawn up with China in mind. The guidelines are aimed at carrying out a promise Clinton made last May after he abandoned his effort to extract human rights improvements from Beijing in return for providing China with most-favored-nation trade benefits.

However, the White House has decided that its new guidelines, while not mandatory, will cover American firms doing business everywhere in the world--thus demonstrating that China is not being targeted for special treatment. “It’s going to be broader than China,” an Administration official confirmed Thursday. He said that the principles probably will be completed and released within the next few weeks.

U.S. companies fear that the guidelines eventually could become mandatory. They point to the example of South Africa, where the so-called “Sullivan Principles” governing the conduct of U.S. companies were later written into law. The Sullivan Principles required American companies doing business in South Africa to actively work against the policy of apartheid.

According to Robert Kapp, president of the U.S.-China Business Council, business leaders also worry that if these rules are adopted, the Chinese government could come to view American firms as agents of U.S. government policy. The details of the guidelines have not been made public yet.

And Kapp--who said that he was voicing his own opinion, not the formal position of his organization--said American firms are concerned that the Administration’s guidelines for business will “inflame the antagonisms” between the companies and the Chinese government.

By contrast, human rights groups are afraid that the White House-drafted rules will not go far enough. “We want to be sure this (Administration effort) does not just ratify the status quo, but actually pushes American business to be a catalyst for change in China,” said Mike Jendrzejczyk of Human Rights Watch/Asia.

As an example of what sort of thorny issues now confront the Administration over its business guidelines, U.S. officials have been trying to decide whether to recommend that U.S. companies overseas try to ensure that their workers have the right to form their own free labor unions or other organizations.

That proposal, strongly supported by American trade unions, also inevitably would arouse the hackles of China’s Communist regime, which requires workers to join units of the government-sponsored All-China Federation of Trade Unions, rather than independent labor unions.

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“That’s where the rubber hits the road. The Chinese aren’t going to allow that (permitting workers to organize trade unions),” said Mark Anderson, director of trade affairs for the AFL-CIO. “. . . .We’ve never been enamored of the idea of a code of conduct for businesses, anyway. At best, it provides the companies with a cloak of respectability, while the same sorts of abuses go on.”

Human Rights Watch has also urged that American companies doing business in China be asked to bar the use of products made with prison labor, to prevent their workers from being forced to attend political indoctrination sessions and to help protect workers from being subject to religious discrimination.

Drafting the guidelines for businesses has been the centerpiece of the Administration’s effort to show that it still cares about human rights in China, despite the decision to extend most-favored nation benefits to the Beijing government without attaching any human rights conditions.

Immediately after that decision, the White House issued what it called a “new human rights strategy.” The first item on the list was a pledge to ask American business leaders to “work with the Administration to develop a voluntary set of principles (for U.S. companies) to advance human rights in China.”

Last summer, during Secretary of Commerce Ronald H. Brown’s trip to Beijing, he tried to enlist some American CEOs traveling with him to endorse the Administration’s effort. But top business leaders have remained so cool to the idea that Administration officials finally decided that they would have to go ahead even without the business leaders.

Administration officials now admit that there has been little or no progress since May. “Frankly, on the human rights front the situation has deteriorated,” Assistant Secretary of State Winston Lord said Thursday in a speech in Seattle. “They’re rounding up dissidents, harassing them more.”

Many Administration officials believe that China’s recent hard line on human rights issues is a reflection of the leadership’s nervousness over the fact that China’s paramount leader Deng Xiaoping, now 90, is believed to be in failing health and could die soon.